Legacy Trading Group, LLC v. Unico, Inc. Doc.

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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
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11 LEGACY TRADING GROUP, LLC, ) Civil No. 07cv2344-L(RBB)
)
12 Plaintiff, ) ORDER GRANTING EX PARTE
) APPLICATION FOR TRO;
13 v. ) SETTING BOND; and SETTING
) BRIEFING SCHEDULE AND DATE
14 UNICO, INC., ) FOR SHOW CAUSE HEARING
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15 Defendant. )
)
16 )
17 On December 17, 2007, plaintiff Legacy Trading Group (“Legacy”), a California limited
18 liability company, filed the above-captioned case1 against Unico, Inc. (“Unico”) alleging
19 violation of Section 14(a) and (c) of the Securities Exchange Act of 1934 and the Rules
20 promulgated thereunder, and Arizona Revised Statute § 10-705. Unico is a publicly-traded
21 Arizona corporation with San Diego as its principal place of business, with shares registered
22 with the Securities and Exchange Commission (“SEC”). Unico filed a Schedule 14A Definitive
23 Proxy Statement on November 20, 2007, with the SEC disclosing that Unico would hold a
24 Special Meeting of shareholders on December 21, 2007, in San Diego, California. At that
25 Special Meeting, the shareholders were to vote on amending Unico’s Articles of Incorporation in
26 order to effectuate a reverse stock split.
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28 Plaintiff filed this case as a class action.
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 Case 3:07-cv-02344-L-RBB Document 8 Filed 12/18/2007 Page 2 of 4

1 Plaintiff filed an ex parte application for a TRO and notice was given to defendant of the
2 Complaint and application for TRO. In its ex parte application, plaintiff contends that notice of
3 the Special Meeting and/or the Proxy Statement were not provided to all shareholders. Prior to
4 the December 18, 2007 hearing on plaintiff’s application, defendant filed an opposition.
5 Counsel for both parties appeared at the hearing.
6 A party seeking injunctive relief under Federal Rule of Civil Procedure 65 must show
7 either (1) a combination of probable success on the merits and the possibility of irreparable
8 harm, or (2) that serious questions are raised and the balance of hardships tips sharply in the
9 moving party's favor. Walczak v. EPL Prolong, Inc., 198 F.3d 725, 731 (9th Cir. 1999); Sun
10 Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1119 (9th Cir. 1999); Roe v. Anderson,
11 134 F.3d 1400, 1402 (9th Cir. 1998). “‘These two formulations represent two points on a sliding
12 scale in which the required degree of irreparable harm increases as the probability of success
13 decreases.’” Roe, 134 F.3d at 1402 (quoting United States v. Nutri-cology, Inc., 982 F.2d 394,
14 397 (9th Cir. 1992)); accord Sun Microsystems, 188 F.3d at 1119. “Thus, ‘the greater the
15 relative hardship to the moving party, the less probability of success must be shown.’” Sun
16 Microsystems, 188 F.3d at 1119 (quoting National Ctr. for Immigrants Rights v. INS, 743 F.2d
17 1365, 1369 (9th Cir. 1984)). Under the second standard, “‘serious questions’ refers to questions
18 which cannot be resolved one way or the other at the hearing on the injunction and as to which
19 the court perceives a need to preserve the status quo lest one side prevent resolution of the
20 questions or execution of any judgment by altering the status quo.” Gilder v. PGA Tour, Inc.,
21 936 F.2d 417, 422 (9th Cir. 1991) (quoting Republic of Philippines v. Marcos, 862 F.2d 1355,
22 1362 (9th Cir. 1988) (en banc)). Furthermore, “serious questions” are substantial, difficult, and
23 doubtful, as to make them a fair ground for litigation and thus for more deliberate investigation.”
24 Id.
25 For the reasons set forth in the official transcript of proceedings, the Court finds plaintiff
26 has demonstrated, with admissible evidence, that it will suffer irreparable harm if the Special
27 Meeting for Shareholders is held on December 21, 2007, because notice of the Special Meeting
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1 and the Proxy Statement was not provided to all shareholders in violation of Section 14(a) and
2 ARS § 10-705. The Court further finds that the likelihood of success on the merits and the
3 balance of harm tip in plaintiff’s favor. Finally, the public interest is best protected by
4 enforcement of Section 14(a) which is intended to prevent management from obtaining
5 authorization of corporate action through inadequate disclosures in proxy solicitation and to
6 “safeguard the corporate suffrage of shareholders.” Ash v. GAF Corp., 546 F. Supp. 89, 92
7 (D.C. Penn. 1982).
8 Based on the foregoing and for the reasons more fully set forth in the Court’s official
9 transcript of proceedings, plaintiff’s ex parte application for a TRO is GRANTED. Defendant
10 is hereby ENJOINED and RESTRAINED from holding a Special Meeting of the shareholders
11 on December 21, 2007, or at any other time until the preliminary injunction hearing in this
12 matter is heard.
13 IT IS FURTHER ORDERED:
14 1. Plaintiff shall post a bond in the amount of $10,000.00 within 48 hours of the
15 filing of this Order.
16 2. That defendant shall show cause why a preliminary injunction should not issue on
17 Monday, January 7, 2008 at 10:30 a.m. in Courtroom 14.
18 3. That defendant shall file and serve on opposing counsel an opposition to the
19 application for a preliminary injunction not later than December 28, 2007. If
20 plaintiff desires to file a reply memorandum to defendant’s opposition, it must file
21 and serve its reply not later than January 3, 2008.
22 IT IS SO ORDERED.
23 DATED: December 18, 2007
24
M. James Lorenz
25 United States District Court Judge
26 COPY TO:
27 HON. RUBEN B. BROOKS
UNITED STATES MAGISTRATE JUDGE
28 ALL PARTIES/COUNSEL
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